Tax tips traps and fatal mistakes of a startup

Tax Tips, Traps and

Fatal Mistakes of Startups

by: Tim Miron, CPA, CA

WHAT WE DO

Help business owners KEEP more of the

MONEY they MAKE

Tips - Structure

• Unincorporated

• Less start-up costs

• Expense can reduce income from day job

• Easy

Tips - Structure part 2

• Incorporate

• Off calendar year end

• Salary vs Dividends

• Multiple founders - have their shares vest over 3

years.

• Expanded deductions

Tips – Income Tax

• Borrowing Money

• Insurance (life and health)

• Hybrid Expenses• Home

• Auto

• Cell phone

• Internet

Tips - HST

• Registered for HST

• HST is a net tax

• Registered to file monthly to get money back sooner

• Consider the Quick Method of HST

Traps - Structure

• December year ends

• Taking a wage while still at their day job

• Not planning for EI

• Not planning for personal tax deductions

Trap - Bookkeeping

Bookkeeping is hard enough when its simple

So get a separate bank account!

Trap - Structure

Holding companies

Structure

You can have a Holdco and

the Capital Gains Exemption

Before

After

Traps – Bonusing Down

Small business rate of 15.5% on first

$500,000 in profits

Traps – Maximizing RRSPs

A TFSA and a Corporate Savings Account

could yield more money in retirement

Fatal Mistakes - Structure

• Incorporating Federally

• Incorporating yourself

Fatal Mistakes – Not Filing

• Late Filing Penalties – starting at 10%

• Credibility and Borrowing

Fatal Mistakes – In Writing

• Shareholders Agreement

• Shareholder Register

Fatal Mistakes – Personal Services

• An incorporated employee

• Limited write-offs and an awful tax rate

Fatal Mistakes – Subcontractors

• Set own hours

• Use their own equipment

• Risk of profit or loss (not just hourly)

Ideal Referrals

• Technology / creative company

• Health care professional

• Empire Builders

Questions

?

What we do differently

• Fixed Fee pricing

• Personalized Paycheque

(estimates taxes for 18 months)

• Profit Improvement Review